December 11, 2019
In what might be interpreted as a sign of increasing globalisation, a new study from Intertrust amongst the firm’s corporate clients suggests that almost three quarters (72 percent) of business leaders expect to see more companies setting up overseas operations between now and 2024 compared to just 5 percent who believe it will fall. The conclusion is based on a survey of 100 companies ranging from start-ups to mature multinationals about their expansion plans. Over half (56 percent) of respondents said they plan to expand into up to three markets in the next two years with a further 14 percent aiming to break into four to six new countries.
According to the findings, attractive market conditions, demand for similar products and services and the country’s size and potential are the three biggest drivers influencing business leaders to move into new countries. Despite the strong appetite for cross-border expansion, it takes companies on average seven years to move from operating in one country to multiple markets and according to Intertrust’s research, the process is far from straightforward.
The five biggest obstacles companies say they have faced in setting up new operations are legal and regulatory challenges (53 percent), recruiting and retaining a local workforce (28 percent), hitting their business plan growth targets (23 percent), marketing and sales challenges (21 percent) and political issues (14 percent).
Intertrust’s study underlines how expanding companies often outsource key functions to a specialist provider with a local presence so they can focus on growing the business. One in three respondents (33 percent) said they have either have or would outsource payroll, HR and tax functions while 28 percent and 16 percent would do so with legal and accounting reporting requirements respectively.